The FTSE 100 surged to its highest level in over five months as a large wave of cash entered a market boosted by strong mobile phone sales figures, telecom merger talk and rate cut hopes.

By midday the index jumped 140 points to 6098.2 in a turnover of 400m shares.

"What we are seeing is a continuation of the momentum investment of the last few days," said James Dewhurst, a salesman at Charterhouse Tilney.

"It has broadened out quite nicely today with the entry of the banks into the rally."

Expectations in some quarters that rates will be cut tomorrow on the back of a weak PMI services survey were helping to lift the market, he added.

But essentially what he called "momentum investment" was being driven by investors wanting to spend the large amount of cash at their disposal on the big sectors rather than real confidence in the economy.

Mr Dewhurst said: "The upside is exacerbated by the fact that no one wants to sell.

"Investors have a lot of cash and new allocations to think about. They're afraid of underperforming, or being left behind.

"What we're seeing is very impressive, but what upsets people is the departure from fundamentals.

"At some point these will have to reassert themselves. If this rally is to be sustainable it must include more sectors. If it does not, you have to question its durability."

The telecom and banking sectors led the rally, up 3.8% and 3.6% respectively.

Securicor, Cable & Wireless, Standard Chartered and Royal Bank of Scotland were in the vanguard.

C&W said that total subscriptions to its mobile telephone service jumped 13% to 3.3m in the last three months of 1998 from the previous quarter.